By Lee Hyo-sik
Staff Reporter
President Roh Moo-hyun is expected to unveil a mini-Marshall plan for North Korea during his scheduled meeting with Kim Jong-il late this month but the commitment will go nowhere if his successor rejects the plan and fails to secure the funds to finance the large-scale economic project, many bankers and analysts here said.
Besides issuing more state bonds and increasing taxes to finance the envisioned project, the government plans to attract financing from the World Bank and other international financial institutions for the project.
However, they say the government will likely face difficulties persuading international financial organizations to provide funds for inter-Korean economic projects, at least until North Korea verifiably completes denuclearization.
Seoul Financial Forum Chairman Kim Ki-hwan told The Korea Times that unless the ongoing six-party talks make notable progress toward denucleraization, it will be almost impossible to draw funds from international financial institutions. ``In particular, the U.S. exercises significant influence on the decision-making of the World Bank and other international institutions. So, unless the U.S. verifies North's complete dismantlement of nuclear weapons, the Korean government will not be able to get funds from multilateral financial organizations for the North Korean project.''
In February, South and North Korea, the U.S., China, Russia and Japan signed an agreement, requiring Pyongyang give up its nuclear weapons program in return for economic and diplomatic incentives. But some countries, including the U.S., still question whether the Stalinist state is truly willing to abandon its nuclear ambitions.
Finance and Economy Minister Kwon O-kyu told reporters on Thursday that the government will first raise money through the Inter-Korean Economic Cooperation Fund to finance infrastructure development and other projects. ``We will also closely work with international institutions to attract funds from outside.''
Kwon said the government has yet to decide when it will request overseas financial organizations to provide funds, adding the timing depends on the progress of the ongoing six-party talks and bilateral talks between the U.S. and North Korea.
According to a report by the Korea Development Bank (KDB), it is projected that the government needs to raise some 60 trillion won over the next 10 years to finance a variety of its planned inter-Korean economic projects.
The report suggested that the government secure 40 trillion won mostly through state bond issuances and tax hikes, while raising the remaining 20 trillion won from either private companies here or international institutions and other foreign sources.
The bank estimated that among major inter-Korean projects, the government will spend about 14 trillion won to build roads, railways and other infrastructure, 13.6 trillion won to expand the Gaesong Industrial Complex, and 10 trillion won to provide electricity and other energy aid.
To realize the first inter-Korean summit between former President Kim Dae-jung and North Korean leader Kim Jong-il in June 2000, the South gave $450 million in cash to the North.
During the second inter-Korean summit, Kim Jong-il is expected to squeeze as much economic aid as possible from Roh, whose tenure is less than seven months from ending.
But Roh in his twilight presidency may backfire if his commitment means more tax for voters and military budget cuts, a Seoul banker said. Moreover, who will be the next president will be the key factor for the success of Roh's mini-Marshall plan, he said.
Whoever wins the presidency, he or she would not just honor what his or her predecessor had committed to the Stalinist country, he speculated.